Can NPS and PPF accounts make you crorepati? Here's what you need to know

Longer investments result in higher returns. People make financial investments to meet their needs in the future such as after retirement. No matter the type of investment you choose like mutual funds, equities, bonds, conventional deposits, or any other scheme, they always perform better when they are held for a longer period of time. If you want to get a larger return, two particular programs including National Pension System (NPS) and Public Provident Fund Account (PPF) stand out because they are long-term saving-cumulative investment programs even though they are distinct from one another.

But, can these schemes make you a crorepati? According to Utkarsh Sinha, Managing Director at Bexley Advisors, both NPS and PPF can assist you in achieving your objectives but which one you prefer depends on whether you value predictability (and hence safety) in a PPF or return potential (and so volatility and risk) in an NPS.

Public Provident Fund (PPF):

PPF accounts give investors a triple threat of safety, guaranteed profits, and tax advantages. It is considered a tool to help individuals generate wealth for their retirement and a part of the government’s small-saving programs. Among its many perks, PPF is well-liked as it is among the safest methods of investment because it is guaranteed by the government and gives a guarantee on investments. A single Indian citizen or a guardian acting on behalf of a minor can open a PPF account. They can be opened at any bank or post office across the country.

A maximum 7.1 percent annual return on investment is guaranteed for investors. Investments in PPF accounts can range from Rs. 500 to Rs 1.5 lakh per fiscal year. An investor can make multiples of 50 instalment payments reaching a maximum of 1.5 lakh rupees with PPF. National Pension System (NPS):

The National Pension System (NPS) was established as a voluntary retirement savings program allowing investors to make a defined sum toward planned savings and so ensure their future in the form of a Pension. NPS is recognised as the most affordable pension plan in operation. Additionally, administrative costs and fund management fees are the cheapest. Subscribers can choose their own pension fund and investing options, and see their money expand. The PFRDA oversees the scheme.

As stated by Sinha, NPS provides a wider range of choices for people to choose from, and the performance of the fund is crucial when deciding where to invest. However, because PPF returns are predetermined, there is no selection process. Depending on one’s age and goals, a ratio of NPS and PPF is probably the wisest course of action for any retail investor who wants to mix fixed income and equity.

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